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Laying the Groundwork for B2B

Top U.S. negotiators working on China's re-entry to the World Trade Organization aren't the only ones trying to clear major roadblocks

Top U.S. negotiators working on Chinas re-entry to the World Trade Organization arent the only ones trying to clear major roadblocks.

In a country where business is based on guan-xi (relationships) and IT investments are almost always focused on lowering costs, U.S. enterprises have to work especially hard to persuade Chinese companies to buy into business-to-business e-commerce and the notion that sharing information online is as important as cutting costs. To get that message across, companies such as United Parcel Service of America Inc. and Sina.com are investing in pilot projects that they hope will demonstrate the value of e-commerce.

"In the United States, you use technology to streamline the supply chain and to improve customer service," said Edward Choy, e-commerce manager of UPS Asia-Pacific region, in Singapore. "In China, people are more tuned in to lowering costs. Ultimately, weve had to focus them on cost reduction but also on the benefits of providing knowledge to the customer."

To drive that message home, UPS has launched what it calls its Customer Automation Program. UPS places PCs linked to its shipping system at customer sites, enabling Chinese companies to print their own smart shipping labels and to see the cost benefits of B2B commerce firsthand. UPS covers the cost of the hardware and software.

Further reading

Sina.com, based in Hong Kong with U.S. headquarters in Sunnyvale, Calif., has taken a different approach. The Chinese language content provider plans to launch a B2B e-marketplace in China this fall as a complement to its existing services marketplace. In the meantime, to demonstrate to Chinese businesses the value of online content and transactions, the company is providing a wealth of Chinese language, vertical-industry-oriented news and information on its Web portals, Sina.com.cn and Sina.com. The idea is to get Chinese businesses used to the idea of collaborating online.

"Its pushing e-business by example," said Hurst Lin, U.S. general manager and vice president of business development. "Weve had to teach them something they wouldnt otherwise normally think about."

Such demonstrations and investments go a long way in China, where many business relationships are developed as a result of personal contact. UPS officials say a growing number of Chinese businesses are participating in its automation program, while Sina.com has more than 1,000 Chinese companies exchanging information using its portals.

And while old habits die hard, experts say things are starting to change. "Personal, face-to-face relationships do account for a lot of business in China," said Joseph Borich, executive director of the Washington State China Relations Council, in Seattle. "But the Chinese are pragmatic. I cant think of a single business deal in my experience in China that was not consummated when it made perfect business sense."